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Are Car Title Loans Bad?

Like other types of alternative loans, car title loans are often a subject of hot debate. Some claim that they are bad for consumers. Are they right? For a short answer – no, they are not.

Car title lenders help serve an otherwise under-served market. Many people cannot obtain traditional loans due to credit issues. However, car title lenders often work with such individuals to help them get the money they need. In fact, Car Cash Loans will never run a credit check, allowing you to skip that awkward process if you have credit problems.

Let’s explore some of the misconceptions that are out there regarding car title loans.

Interest Rates

Some will tell you that the interest rates are too high on car title loans. They may cite the fact that banks typically offer lower interest rates, but this is similar to arguing that a neighborhood isn’t worth living in because a ritzy neighborhood offers nicer houses. If you can’t get a nicer house because of credit problems, should you go homeless or live in a less fancy house? Similarly, if you have an urgent expense and can’t get a loan from a bank, should you just throw in the towel or go for a car title loan? Obviously, you should go for a car title loan so that you can pay your urgent expense off.


Some will also cite that you’ll risk losing your vehicle with a car title loan. This is true, but it happens 4 to 8 percent of the time. This means that over 90 percent of car title loans do not end up in repossessions.

Also, suppose that you are considering a home equity loan instead of a car title loan. You could lose your house with a home equity loan or your vehicle with a car title loan. Which would be worse? Obviously, it is worse to lose a house than a vehicle.

Endless Debt

Many claim that it is too difficult for borrowers to get out of debt when taking out car title loans. However, this assumes that you are incapable of deciding how much money you should borrow.

To combat this potential issue, be sure to do the math and borrow only what you need. Figure out how you will pay the loan back. For example, if you intend to borrow $2,600 and know that you’ll receive a $3,000 check in the mail in 2 weeks, you’ll have a way to pay your loan back quickly.

Endless debt can occur with any type of loan. This is why you should do the math, read the fine print and make sure you understand your loan before signing up. After all, should someone else tell you what you can and can’t borrow?

What They Ignore

Critics of car title loans often ignore the key benefits of such loans. For example, those who need to borrow money quickly will be out of luck with most banks. However, car title loans are generally processed on the same day. In fact, Car Cash Loans will typically have you in and out – with cash – in around an hour.

Also, as mentioned, car title lenders are often willing to work with those who have credit problems. How many banks do you know that will do so?


No means of borrowing is perfect and car title loans are no exception. However, just because banks don’t want to work with some consumers doesn’t take away their borrowing needs. Thus, some people must turn to alternative lending to borrow the money they need – and a car title loan is a viable option.

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